Disclaimer: This article provides general information under Alabama law and is not legal advice. Consult a qualified attorney for guidance on your specific situation.
Detailed Answer
When someone dies in Alabama, the personal representative (executor or administrator) must identify all assets, pay valid claims and administrative costs, then determine the remaining estate (the residue). Follow these key steps:
1. Inventory and Appraisal
The personal representative compiles an inventory of all probate and non-probate assets, including bank accounts, real estate, investments, vehicles, personal property, retirement accounts, and life insurance proceeds. Alabama Code § 43-2-350 requires filing a detailed inventory and appraisal with the probate court. Ensure you list current fair-market values for each asset.
2. Notice to Creditors
Within 30 days of appointment, the personal representative must publish notice to creditors in a local newspaper and send written notice to known creditors. Creditors then have six months to file claims. (See Alabama Code § 43-2-360.)
3. Paying Debts, Expenses, and Taxes
After the claims period expires, the representative verifies and settles valid debts and administrative costs in this order, per Alabama Code § 43-2-381 (findlaw.com):
- Funeral and last illness expenses;
- Costs of administration, including filing fees;
- Preferred debts (e.g., wages, taxes);
- General creditors’ claims.
Additionally, the representative pays any federal estate tax and fees for professional services. Alabama does not impose a state estate tax, but you must consider federal requirements.
4. Calculating the Residue
After debts and fees are paid, the remaining assets form the residue of the estate. The representative prepares a final accounting showing all assets collected, liabilities paid, and the net value left. This accounting must be approved by the probate court.
5. Distribution of Remaining Assets
Once the court approves the accounting, the personal representative distributes the residue according to the will’s terms or, if there is no will, under Alabama’s intestacy laws (see Alabama Code § 43-8-102). The beneficiaries receive their share in cash or by transferring titled property.
Helpful Hints
- Keep thorough records of all receipts and disbursements.
- Obtain appraisals from qualified professionals for real estate and valuable personal property.
- Consult the probate clerk early to confirm filing deadlines.
- Review federal estate tax thresholds to determine if a return is required.
- Communicate regularly with beneficiaries to manage expectations.
- Work with a CPA or tax advisor for complex assets like closely held business interests.